But beneath the idyllic image of the "Friendly Islands" lies a country mired in poverty where thousands face hardship due to lost remittances because of global financial woes.

"I think when you go down to the grassroots, people are really feeling hardship," said publisher and broadcaster Kalafi Moala, adding that financial difficulties had become pronounced since the 2008 global economic crisis.

"Because even though the macro picture of the economy looked bleak in years past, there was enough cash in people's hands that they were still able to buy food and stuff like that. But right now you can see hardship everywhere."

Polynesia's only surviving monarchy has suffered badly in the global slump, with the foreign remittances on which it relies for at least 35 percent of gross domestic product drying up dramatically.

Jobs that were once available to Tongans living overseas in areas such as construction and landscaping disappeared overnight, immediately cutting off the cash flow home.

In addition, the global instability of 2008 brought with it sharp rises in the costs of imported fuel and food, resulting in rising inflation, while each year more school leavers join the ranks of the jobless.

The government says the impact was offset in part by foreign loans for capital works, but it noted in a budget statement in December that "further borrowing must be avoided given that Tonga is already at high risk of debt distress".

Basking in tropical heat, the tiny kingdom of Tonga is home to some 106 000 people but more than double that number live overseas - mostly in the United States, but also in New Zealand and Australia - and traditionally send some of their income home.

Derek Brien, who heads the Pacific Institute of Public Policy think-tank, said while Tonga was lucky to have these migration channels, remittances were its largest source of foreign exchange, leaving it vulnerable to overseas crises.

"I suppose the ongoing question is: 'How do you then protect against external shocks like the global financial crisis that is going to affect remittance flows and therefore have that kick-on effect back home,'" he said.

"It's not the challenge for Tonga alone, it's that of most of the smaller island economies in the Pacific."

"The one thing to put our hope in"

The big hope for Tonga, a cluster of some 170 islands scattered over 700 000km² lying just west of the international dateline, is tourism.

Visitor numbers are improving, but they remain modest at under 90 000 a year.

It is nevertheless acknowledged as a significant contributor to Tonga's GDP which was estimated at about T$706 million ($515-million) last year.

Figures show that tourist receipts totaled T$60 million in the 12 months to January 2011 - the highest point in the past decade.

Tourism suffered in the wake of violent riots in the capital Nuku'alofa in 2006 which left the downtown a smouldering wreck, and after a 2009 tsunami in the remote area of Niuatoputapu triggered by a massive 8.0 magnitude quake.

These events followed the collapse of national carrier Royal Tongan Airlines in 2004.

Tonga hopes to see economic growth of 2.0 percent by 2013/14, in part through increased high-value tourism focused on the outer islands such as Vava'u which has white sandy beaches and ideal sailing conditions.

But in its latest budget statement, the government notes the industry remains constrained by remoteness, bad infrastructure, lack of funds for marketing, poor maintenance of historical sites and the need to upgrade accommodation.

Acting director of the Ministry of Tourism, Sandra Fifita, said the sector had great potential for the devoutly Christian country.

"It's the main sector that brings foreign investment to Tonga; much larger than agriculture and fisheries," she said.

"Tourism of course leads all sectors in terms of revenue," agrees Moala, adding that it too suffers from infrastructure problems which also impact the two other main industries - agriculture and fisheries.

He cited the case of a Tongan fishing company which went bankrupt in January despite supplying tuna and snapper to a ready export market in Japan.

"They were employing over 200 people. But they were losing a lot of money, (due to) irregularity in terms of flights, flights that were cancelled so their shipments went bad and stuff like that," he said.

Tourism was "the one thing we have to put our hope on", he added.

"There's a lot of infrastructural changes, a lot of attitudinal changes that have got to take place in Tonga. But we've got to build up the tourism industry as the main earner for Tonga. We've still got a long way to go."

AFP

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